ハウス食品グループ本社（2810） – 【Delayed】FY2021 Results Briefing

The original disclosure in Japanese was released on May 11, 2022 at 15:00FY2021 Results BriefingHouse Foods Group Inc.Stock code 2810May 12, 2022https://housefoods-group.com/ContentsPart: 1Part: 2Part: 3AppendixFY2021 ResultsFull-Year Plan for FY2022Seventh Medium-term Business Plan Progress ReportSupplementary MaterialsP. 3‒8P. 9‒15P. 16‒22P. 23‒40* We applied the Accounting Standard for Revenue Recognition, etc. from FY2021.Unless otherwise specified, figures for FY2020 are figures after retrospective application of the standard and figures for FY2021 are figures after application of the standard.2Part: 1FY2021 Results3Consolidated ResultsFY2020FY2021FY2021Year on yearBillion yenResultsComparison with net salesRevised targetsComparison with net salesResultsComparison with net salesIncrease/DecreaseNet sales250.1(cid:695) 256.0(cid:695) 253.4(cid:695)+3.3+1.3%-2.6-1.0%Operating profit19.47.8%20.07.8%19.27.6%-0.2-1.0%-0.8-3.9%FY2021 ResultsComparison with revised targets%Increase/Decrease%Ordinary profit19.87.9%22.28.7%21.18.3%+1.3+6.5%-1.1-4.8%Profit*18.83.5%14.75.7%14.05.5%+5.2 +59.5%-0.7-5.1%EBITDA*231.112.4%30.912.1%30.111.9%-1.0-3.1%-0.8-2.6%- Domestic: Affected by the absence of the at-home consumption seen a year earlier and the protraction of the COVID-Net sales19 crisis- International: Surpassed the high level of growth recorded a year earlier in all three priority areasOperating profit- Recorded a decrease in operating profit on a full-year basis for the first time since FY2014- Affected by year-on-year reactionary decline in the Spice/Seasoning/Processed Food Business and rising raw materials prices from the second half, despite the profit contribution of the Restaurant Business (after goodwill was fully amortized in the previous fiscal year)Ordinary profit and profit*12021)- Reflects the sale of investment securities, in addition to decreases in impairment losses and a share of loss of entities accounted for using the equity method recorded the previous year- Gain on sale was used to finance the purchase of treasury shares of 4 billion yen (acquisition period: May 12-Oct. 15, *1 Profit attributable to owners of parent*2 EBITDA: Operating profit (before amortization of goodwill) + DepreciationCopyright (c) House Foods Group Inc. All rights reserved.4Results for FY2021 by Segment (1)FY2021 ResultsBillion yenResultsYear on yearResultsYear on yearComparison with revised targetsComparison with revised targetsResultsYear on yearEBITDA marginResults Year on yearNet salesOperating profitROSConsolidated253.4+3.3+1.3%-2.619.2-0.2-1.0%-0.87.6% -0.2pt11.9% -0.5ptSpice/Seasoning/ Processed Food BusinessHealth Food BusinessInternational Food BusinessRestaurant BusinessOther Food Related BusinessAdjustment (elimination)Spice/Seasoning/ Processed Food BusinessHealth Food BusinessInternational Food BusinessRestaurant BusinessOther Food Related BusinessAdjustment (elimination)117.4-3.0-2.5%-1.912.6-3.0-19.1%-1.110.8% -2.2pt14.9% -1.4pt14.4-0.8-5.6%-0.1+0.3-0.2-1.0% +1.6pt3.7% +1.8pt39.1+5.1+14.8%+0.7 +14.5%-0.113.4% -0.0pt17.2% -0.5pt45.4+0.7+1.6%+2.2+0.13.3% +4.8pt9.5% +0.9pt(cid:695)(cid:695)45.6+1.6+3.8%-0.3-16.4%-0.13.2% -0.8pt4.3% -0.8pt-1.3+0.1-0.3+1.0-0.35.21.51.5-8.6-0.3(cid:695)-1.5+0.0(cid:695)+0.6(cid:695)(cid:695)(cid:695)(cid:695)- The impact of the absence of special demand arising from at-home consumption the previous fiscal year was mainly felt during the first nine months- Operating profit fell, reflecting rising raw materials prices from the second half, in addition to increased depreciation and amortization expense due to – The integration of sales capabilities resulted in greater channel diversification, and sales of jelly products grew. Overall, sales fell, largely due withdrawal investments for growthfrom unprofitable business.- Operating loss narrowed compared to the previous fiscal year, partly reflecting progress on the reduction of costs and reduction of fixed expenses- Growth momentum was maintained in all three priority areas despite outstanding issues such as action on rising raw materials pricesUnited States: Sales rose but profit fell. The tofu business tapped into demand for plant-based food but rising raw materials prices and supply chain disruptions caused some issues in 4QChina: Sales increased but profit decreased. The curry business has huge potential and achieved growth exceeding pre-pandemic levels, despite the absence of positive factors seen in the previous fiscal yearThailand: Both sales and profit increased. Efforts were made to expand vitamin-taking opportunities such as the introduction of large-volume products- Sales in Japan fell, with restaurants called upon to shorten their operating hours for long periods of time. Overseas, sales recovered from the dramatic slump of the previous year.- Profit was boosted (approx. 1.8 billion yen) by the fact that, the previous fiscal year, impairment losses were recorded and goodwill was fully amortized.- The CVS vendor business recovered from the previous fiscal year- The food trading company business was affected by sluggish food service demand- Strategic investments were made to develop the four value chains but certain costs were reduced in light of the protracted COVID-19 crisisCopyright (c) House Foods Group Inc. All rights reserved.5Results for FY2021 by Segment (2)FY2021 Results1H2HFull yearResultsYear on yearResultsYear on yearResultsYear on yearNet sales124.1+0.4+0.4%129.3+2.9+2.3%253.4+3.3+1.3%” Billion yenConsolidatedSpice/Seasoning/ Processed Food BusinessHealth Food BusinessInternational Food BusinessRestaurant BusinessOther Food Related BusinessAdjustment (elimination)Operating profitNet salesOperating profitNet salesOperating profitOperating profitOperating profitOperating profitNet salesOperating profit9.057.05.47.0-0.9-2.2-2.6-32.1%-1.1-13.0%-8.8%10.2+0.7+7.2%19.2-3.8%60.5-1.2%117.4-0.2-3.0-3.0-0.8-1.0%-2.5%-19.1%-5.6%-5.6%12.6+2.9%14.4-0.3-0.3(cid:695)(cid:695)-0.1+0.3(cid:695)7.27.40.2Net sales19.4+1.2+6.4%19.7+3.9+24.6%39.1+5.1+14.8%3.2+0.3+8.6%2.0+0.4+25.5%5.2+0.7+14.5%Net sales22.1+0.4+2.0%23.3+0.3+1.2%45.4+0.7+1.6%0.5+2.0(cid:695)1.0+0.2+24.7%1.5+2.2(cid:695)Net sales22.9+2.1+10.1%22.7-2.0%45.6+1.6+3.8%0.8-4.3-0.6-0.1-13.2%+0.0-0.1(cid:695)(cid:695)0.7-4.3-0.9-19.8%(cid:695)(cid:695)1.5-8.6-1.5-0.3-0.3+0.0-16.4%(cid:695)(cid:695)6Copyright (c) House Foods Group Inc. All rights reserved.-0.7-0.4+0.2+0.5-0.5-0.2-0.3+0.1Operating Profit Change Analysis Factors of changes by business segment (Billion yen)Spice/Seasoning/ Processed Food Business-3.0Restaurant Business+2.2Other Food Related Business-0.319.419.2Adjustment (elimination)+0International Food Business+0.7Health Food Business+0.3FY2021 ResultsBillion yen1H2HFull yearSpice / Seasoning / Processed Food Business- Change in sales- Change in cost of sales ratio- Marketing costs- Other expenses- Gaban and other affiliated companies, adjustmentHealth Food Business- Change in sales- Change in cost of sales ratio- Marketing costs- Other expensesInternational Food Business- Business in the United States- Business in China- Businesses in ASEANRestaurant Business- Ichibanya Co., Ltd. (consolidated)- Amortization of goodwill, etc.Other Food Related Business- Delica Chef Corporation- Vox Trading Co., Ltd. (consolidated)Adjustment (elimination)-2.6-0.4-3.0-1.1-0.2-0.8-0.2-0.3-1.0+0.3+0.7-1.4-1.2-0.5+0.5-0.3-0.2-0.5-0.3-0.9+0.4-0.0+0.2+0.3+0.3-0.3+0.3+2.0+0.1+1.8-0.1+0.1-0.2-0.1-0.9+0.5-0.2+0.4+0.1+0.2+0.4-0.4+0.2+0.5+0.2+0.2+0.3-1.0+0.8+0.1+0.4+0.7-0.1-0.1+0.8+2.2+0.3(cid:695) +1.8-0.3+0.0-0.3+0.0-0.2-0.2-0.0-0.1+0.1+0.7FY2020FY2021Changes in operating profitCopyright (c) House Foods Group Inc. All rights reserved.7Overview of Non-operating Income and Expenses and Extraordinary Income and LossesFY2021 ResultsBillion yenFY2020FY2021Main factorsYear-on-year differenceOperating profit19.419.2-0.2Non-operating Income and Expenses0.41.9+1.5- Increase in subsidy income including payments for cooperation with requests to shorten business hours in the Restaurant Business- Decrease in share of loss of entities accounted for using equity method+0.9+0.9Ordinary profit19.821.1+1.3Extraordinary income and lossesProfit before income taxes-7.82.2+10.0- Increase in gain on sale of investment securities- Decrease in impairment loss* Previous fiscal year: An impairment loss of -9.1 was recognized in relation to Ichibanya …(1)12.123.4+11.3Impact of (1)Income taxes5.17.5+2.4- Decrease in tax effectsProfit attributable to non-controlling interests-1.81.9+3.7- Increase in profit (loss) attributable to non-controlling interests* In the previous fiscal year, within the impairment loss net of income tax effect, the amount equivalent to non-controlling interests (49%) had an impact Profit attributable to owners of parent8.814.0+5.2+0.6+9.4+2.5+2.8Copyright (c) House Foods Group Inc. All rights reserved.8Part: 2Full-Year Plan for FY20229Assumptions for ForecastsFull-Year Plan for FY2022 Prices for major raw materials overall are expected to increaseWheatChicago Board of Trade (CBOT) (USD per bushel)Palm oilBursa Malaysia Derivatives (BMD) (USD per metric ton)SoybeanChicago Board of Trade (CBOT) (USD per bushel)10864202,0001,5001,00050001Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY2019FY2020FY2021FY2019FY2020FY2021FY2019FY2020FY2021 Assumptions for forecastsThe following three factors pushing up costs are reflected in the operating profit forecastFY2021Billion yen(1) Inflation(1) InflationFY2022(2) Ukraine crisis(3) Depreciation of the yen- Inflation driven by with the resumption of economic activity(Higher raw material and energy prices and higher logistics costs)(Billion yen)-4.8 …(1)- Risks associated with Ukraine crisis-2.5 …(2)- Higher costs due to depreciation of the yen*-0.8 …(3)* Impact on cost of decline in yen relative to dollar: 80 million yenConsolidatedSpice/Seasoning/ Processed Food BusinessHealth Food BusinessInternational Food BusinessRestaurant BusinessOther Food Related Business-4.8-3.0-0.2-1.0-0.7-0.0-2.5-2.0-0.1-0.3(cid:695)(cid:695)-0.8-0.8(cid:695)(cid:695)(cid:695)(cid:695)10Seek to absorb impact through price revisionsDevelopments need to be monitored attention, as outlook is currently uncertainCopyright (c) House Foods Group Inc. All rights reserved.20151050-2.6-2.0-0.0-0.6-0.1-0.0Price RevisionsFull-Year Plan for FY2022Plan to implement prices revisions in each business in response to rising raw materials prices, etc.SegmentOperating companyCategoryRevision rateMajor productsSpice/Seasoning/ Processed Food BusinessHouse Foods Corporation(Household use)Packaged noodlesRevision date2022/6/110.8%Spice2022/7/110.9% on averagePackaged noodlesSpice*1Roux2022/8/1510%Roux productsRetort pouched products*2Retort pouched products2022/8/15Dessert2022/8/15Gratin2022/8/15Food service products5%8%5%5-7%2-7%(Food service products)2022/8/157% on average Roux, flakes, retort pouched products, desserts, etc.Gaban Co., Ltd.(Food service products)Spice2022/7/120.4% on average Certain Western-style spices and processed productsDessertGratinInternational Food BusinessBusiness in the United StatesTOFU2022/110% on averageBusiness in China2022/48.5% on averageHousehold curry rouxTofu sold in United StatesCurry roux sold in ChinaRestaurant BusinessIchibanya Co., Ltd.Curry sauce2022/6Meat toppings2022/6*1 Certain products including Kosho (black pepper), Togarashi (red pepper) and Western-style spices*2 Excluding Curry Ya Curry and Pro Quality productsCopyright (c) House Foods Group Inc. All rights reserved.11Consolidated Results ForecastFull-Year Plan for FY2022Billion yenFY2021FY2022Year on yearFinal year of Seventh Medium-term Business Plan (FY2023)ResultsComparison with net salesForecastComparison with net salesIncrease/Decrease%TargetGapNet sales253.4(cid:695) 270.6(cid:695) +17.2+6.8%305.0-34.4Operating profit19.27.6%18.46.8%-0.8-4.3%26.0-7.6Ordinary profit21.18.3%19.57.2%-1.6-7.7%Profit*114.05.5%11.24.1%-2.8-19.8%EBITDA*230.111.9%29.811.0%-0.3-1.0%40.4-10.6[Short term]- The business environment in the second year of the Medium-term Business Plan will be extremely challenging, with disruptions associated with the reopening of the economy and heightened geopolitical risk- Plan to offset factors pushing up costs through the implementation of profit improvement measures. This will bring about dramatic growth in the final fiscal year of the plan[Long term]- Given such conditions, initiatives to rebuild the business structure through backcasting will be implementedInitiatives to develop four value chains will move into the execution stage- Efforts initiated the previous fiscal year to improve the quality of the B/S through the implementation of treasury share purchases will continue being madeAmount of shares to be acquired: 6 billion yen; Maximum number of shares to be acquired: 2,400,000 shares; Acquisition period: May 12, 2022-October 18, 2022*1 Profit attributable to owners of parent*2 EBITDA: Operating profit (before amortization of goodwill) + DepreciationCopyright (c) House Foods Group Inc. All rights reserved.12Forecast by SegmentFull-Year Plan for FY2022Billion yenForecastYear on yearForecastYear on yearForecastForecastYear on yearYear on yearNet salesOperating profitROSEBITDA marginConsolidated270.6 +17.2+6.8%18.4-0.8-4.3%6.8%-0.8pt11.0%-0.9ptSpice/Seasoning/ Processed Food BusinessHealth Food BusinessInternational Food BusinessRestaurant BusinessOther Food Related BusinessAdjustment (elimination)122.5+5.1+4.3%9.7-2.9-23.2%7.9%-2.8pt12.1%-2.7pt15.8+1.4+9.5%0.3+0.4(cid:695)1.9%+2.9pt5.4%+1.7pt45.1+6.0 +15.3%5.5+0.3+4.8%12.2%-1.2pt15.7%-1.5pt52.0+6.6 +14.5%3.4+1.9 +126.4%6.5%+3.2pt12.0%+2.5pt44.2-1.4-3.0%1.6+0.1+8.1%3.6%+0.4pt4.8%+0.5pt-9.0-0.4(cid:695)-2.1-0.6(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)Spice/Seasoning/ Processed Food Business- Strengthen ability to communicate menu and brand value (convenience, impressive arrangement, varieties) and create demand for roux productsAlso harness growth of spices and retort pouched products and capture demand stemming from recovery of food service-use products to bring about improvement in profit in the final year of the Medium-term business planHealth Food Business- Steadily implement domestic profit structure reforms and build global Functional Ingredients VC- Improve the profitability of the vitamin products business and focus management resources on developing the Lactobacillus BtoB businessInternational Food Business- United States: Improve profitability through price revisions and actively invest in building a resilient business base- China: Household use: Market products to win over new customer groups and create more openings though the development of new wholesalersFood service use: Seek to spread risk by supplying raw materials to CVS and for use in processed products in a bid to reduce the impact of COVID-19- Thailand: Develop added value and large volume products, assuming that the growth of existing bottled products will stabilizeUse 10th anniversary of C-vitt as a starting point for expansion- A gradual recovery to pre-pandemic levels is forecast and net sales of existing restaurants are estimated at 116% of the level a year earlier- Expand menu varieties to make “customized curry,” which is Ichibanya’s strength, even more enjoyable- Continue to strengthen R&D and increase personnel in strategic areas to develop the four value chainsCopyright (c) House Foods Group Inc. All rights reserved.13Restaurant BusinessAdjustment (elimination)Operating Profit Change Analysis Factors of changes by business segment (Billion yen)Restaurant Business+1.9Other Food Related Business+0.119.2Full-Year Plan for FY2022Billion yenIncrease/DecreaseSpice / Seasoning / Processed Food Business18.4Adjustment (elimination)-0.6Health Food Business+0.4International Food Business+0.3Spice/Seasoning/ Processed Food Business-2.9- Change in sales- Change in cost of sales ratio- Marketing costs- Affiliates, other expenses- Risk of uncertainty*Health Food Business- Change in sales- Change in cost of sales ratio- Risk of uncertainty*International Food Business- Business in the United States(Risk of uncertainty*)- Business in China (Risk of uncertainty*)- Businesses in ASEANRestaurant Business- Ichibanya Co., Ltd. (consolidated)Other Food Related Business- Delica Chef Corporation- Vox Trading Co., Ltd. (consolidated)-2.9+1.5-1.4+0.8-1.0-2.8+0.4+0.7-0.2-0.1+0.3+0.1(-0.2)+0.2(-0.1)+0.1+1.9+1.9+0.1+0.1+0.1-0.6-0.8FY2021FY2022 ForecastAdjustment (elimination)Changes in operating profit* The forecast factors in higher costs associated with the Ukraine crisis and the depreciation of the yen assumed at the present time as the risk of uncertainty.Copyright (c) House Foods Group Inc. All rights reserved.14Dividends Dividend PolicyFull-Year Plan for FY2022To maintain stable dividends, with a dividend payout ratio of at least 30% on a consolidated basis excluding the effects of extraordinary income/losses arising from business combination and the amortization of goodwill as a standard.Annual dividend (per share)Payout ratioPayout ratio based on dividend policy443835303030324646464653.1%32.9%40.5%40.3%29.7%31.8%80%70%60%50%40%30%20%10%0%(Yen)504030201001413FY2012 FY2013 (*) FY20141516FY201517FY201618FY201719FY201820FY201921FY202022FY2021 Plan23FY2022 Forecast* FY2013: Includes an additional 5 yen dividend to commemorate the Company’s 100th anniversary.Copyright (c) House Foods Group Inc. All rights reserved.15Part: 3Seventh Medium-term Management Plan Progress Report16Progress on “Three Responsibilities” in First YearSeventh Medium-term Business Plan Progress ReportFor customersFY2021ProgressProgress was made on business/network reconstruction from an optimal Group perspective in the Spice Value Chain (VC), while in other VCs, initiatives for the establishment of a framework/base were implemented and progress through trial and error was madeThemesFY2023 targetFY2021 resultKPI- Achievement of growth driven Net sales305.0 billion yen253.4 billion yenGlobal Provision of “Healthy Life Through Foods”by four value chains- Realization of three GOTROS- Creation of new value through collaborative creationEBITDA margin8.5%13.2%7.6%11.9%For our employees and their familiesFY2021ProgressMeasures to increase diversity in terms of personal characteristics, experience and aptitudes were implemented for the “achievement of diversity”A corporate culture assessment and workshops were conducted from the perspectives of accepting diversity and encouraging a challenging spiritThemesFY2023 targetFY2021 result- Implementation of job satisfaction transformation (Ease of work)Achievement of diversity- Support for demonstration of individuality and mix of personalitiesKPICreation of time(Management of total actual working hours)Percentage of female employees in management postsMid-career recruitment1,850 hoursHouse Foods Group Inc.: 1,930 hoursHouse Foods Corporation: 1,883 hoursAt least 12%New graduate/Mid-career = 6:411%New graduate/Mid-career = 6:4ForsocietyFY2021ProgressProgress on the Seventh Medium-term Business plan was made as plannedSet 2050 carbon neutrality (SCOPE1,2) as a goal and accelerate initiatives accordinglyThemesKPI- Establishment of a recycling-oriented modelHealthy people and a healthy planet- Achievement of a society of healthy longevityReduction of CO2 emissions: Scope 1, 2Scope 3Reduction of total emissionsincluding wasteFY2023 target-9% (compared with 2013)-17,000 t (compared with before initiatives)-6% (compared with 2019)Setting of targets linked to each value chain- Introduced solar panels, cogeneration and carbon FY2021 result- Promoted shift to microwaveable retort pouched free electricityproducts- Expanded areas for investment based on revisions to environmental investment judgment criteria- R&D: Explored health knowledge for each VC (e.g. correlation between long-term and frequent consumption of curry and improved cognitive function in middle-aged and elderly Japanese)Copyright (c) House Foods Group Inc. All rights reserved.17Progress on Investment for Development of Four Value ChainsSeventh Medium-term Business Plan Progress ReportSeventh Medium-term Management PlanFY2021FY2022FY2023Theme: Aim to create synergies through collaborative creation among group companies that handle spices and curry- GSM* capital transfer (Gaban→House Foods – Partial business transfer of Malony businessGroup)(→House Foods Corporation)- Expansion of large-volume retort pouched product – Restructuring of BtoB business *P19production lines (House Foods Corporation)- Establishment of new productions lines in China (House Foods Corporation, Gaban Co., Ltd.)- Optimization of spice production network *P20(from 2023)* Gaban Spice Manufacturing (M)SDN.BHD.Theme: Utilize lactobacillus, vitamins and spices more widely as a Group ingredient- Integration of sales functions- Establishment of company to oversee Southeast (House Foods Corporation, House Wellness Foods Corporation)Asia business *P21Theme: Consider utilizing soybeans not only in the tofu business in the United States but also in other business outside the United States- Expansion of LA plant (from 2023)- Acquisition of land for a third site in the United – Opening of new office in Germany- Strengthening of R&D capabilities in the United States (from 2025)StatesTheme: Create new business model in agriculture business area through collaborative creation both inside and outside the group- CVC: Additional equity contribution to Farmship, Inc.Aiming to be a high-quality company with a global presenceDevelopment of four value chainsReconstruction of portfolio based on what is best for the group rather than what is best for each individual companySpice VCFunctional Ingredients VCSoybean VCValue-added Vegetables VCCopyright (c) House Foods Group Inc. All rights reserved.18Spice VC BtoB-GOTSeventh Medium-term Business Plan Progress ReportReconfiguration of Group resources for growth of domestic BtoB business, which is a growing business area in the Spice VCMaximize customer value, aiming for sustainable growthReorganize the Group to consolidate domestic BtoB business(Implement simple absorption-type merger in which House Foods Corporation transfers food service use business to Gaban)House Foods Group Inc.Aim for business scale of 50 billion yen and ROS of 10% in the futureHouse Foods CorporationGaban Co., Ltd.Simplified absorption-type mergerRelocate Gaban Head office ahead of the merger (March 2022)Equip with development laboratory and test kitchen and strengthen product development with a sense of urgencyNowHousehold-use businessFood service-use businessHouse Foods CorporationNew systemHousehold-use businessFood service-use businessHouse Gaban(Formerly Gaban)Food service-use businessClarify the business areas of both companies. Realize effective allocation of management resources– Name:- Date of changeover: April 1, 2023- Aspiration:House Gaban CorporationSolutions company with ability to make proposals to meet specific needs50.0ROS 10%(Billion yen)Launch of House Gaban22.823.825.2FY2021FY2020FY2020-FY2022: Combined sales of House Foods Corporation’s food service use business and GabanHouse GabanFrom FY2023:FY2022FY2026FY2023FutureCopyright (c) House Foods Group Inc. All rights reserved.19Spice VC Production-GOTSeventh Medium-term Business Plan Progress ReportRebuild Group production system to expand business in the growing spice marketClarify the roles of Group production sites and achieve both the creation of a production system to support growth and improvement in profit Approx. 6 billion yen– Build system to support business growth whilst ensuring profitability of spice business (BtoC and BtoB)(1) Optimize arrangement of production lines based on roles of production sites(2) Strengthen production capacity of Gaban Kanto PlantIntroduce mixed spice manufacturing facilities and packaging facilities for bottled and bagged spices for BtoB and BtoC- Improve labor productivity through realization of optimal system from a Group perspectiveSchedule for strengthening Gaban Kanto PlantSeventh Medium-term Management PlanEighth Medium-term Management PlanFY2021FY2022FY2023FY2024FY2025FY2026Approx. 2 billion yenApprox. 4 billion yen- Gaban Co., Ltd.Expansion workRenovation workIntroductionof new linesNara Plant, House Foods CorporationHouse Ai-Factory Corporation (special subsidiary company)Gaban Kanto PlantGaban Tokai Plant– House Foods CorporationSpecializing in machinery and equipment: Focusing on mass production of large-lot productsSpecializing in labor-intensive production: Optimized for high-mix, variable-volume production- House Ai-Factory CorporationSpecializing in manual operations: Active participation of diverse human resources mainly engaged in manual tasksCopyright (c) House Foods Group Inc. All rights reserved.20Functional Ingredients VC Establishment of Company to Oversee South East Asia BusinessSeventh Medium-term Business Plan Progress ReportEstablished intermediate holding company in Thailand to oversee South East Asia businessAccelerate development of Functional Ingredients VC through injection of management resources– Company name: House Foods Group Asia Pacific Co., Ltd.- Established: April 1, 2022- Role: Responsible for business implementation and expansion and management oversight in South East Asia region, aiming to establish and accelerate Functional Ingredient VCAccelerate the development of new business areas whilst strengthening existing business through localization of product development and quality assurance capabilitiesHouse Foods Group Inc.House Wellness Foods CorporationCooperationHouse OsotspaFoods Co., Ltd.Development of new business areasAim to create business on a scale of 10 billion yen in new areas by 2030Functional Ingredients VCHouse Foods Group Inc.StrengtheningThailandVitamin products businessStrengtheningIndonesiaLicensing businessHouse Wellness Foods CorporationCooperationFunctional Ingredients VCHouse Foods Group Asia Pacific Co., Ltd.CooperationHouse Osotspa Foods Co., Ltd.FutureNew companyFutureNew companyCopyright (c) House Foods Group Inc. All rights reserved.21GovernanceSeventh Medium-term Business Plan Progress Report Changes to Strengthen Governance (From 2013)2020201720132021Transition to holding company systemEstablishment of the Compensation Advisory CommitteeEstablishment of Compliance and Risk Management Department Establishment of Investment CommitteeTransition to Company with Audit & Supervisory CommitteeEstablishment of Nomination Advisory CommitteeIntroduction of restricted stock compensation plan (officers’ compensation)Establishment of Administration Headquarters (to strengthen integration of corporate capabilities)Established Investment Committee as advisory body to the House Foods Group Management Meeting CommitteeEnsures appropriateness and efficiency of M&A transactions and strengthens governance in relation to M&A in order to use growth investment resources more effectively for realization of the 4 VCs Designs roles and processes in each phase aiming for optimal balance between brake and accelerator functionsTransactions considered for investmentBusiness implementation divisionsScreening-related divisionsRisk assessmentAssessment of consistency with strategy, business plans, synergies, etc.Investment Committee (investment advisory body)DeliberationManagement Committee/Board of DirectorsImplementation of investmentStart of monitoring process[Normally][When a problem arises]Monitoring bodyInvestment Committee (monitoring)DeliberationOngoingManagement Committee/Board of Directors* Business investments other than M&A (capital investments), environmental investments and CVC investments are subject to different criteriaCopyright (c) House Foods Group Inc. All rights reserved.22End of monitoringWithdrawalAppendixSupplementary Materials23Trends by BusinessSupplementary MaterialsNet sales YoY change (%)1Q2Q3Q4QFull year1Q2Q3Q4QFull yearOld accounting standardNew accounting standardFY2020FY2021Curry roux+8.7+4.0+3.7-7.7+2.1-9.4-5.0+0.2+1.5-3.4Spice/Seasoning/ Processed Food BusinessHouse Foods CorporationHealth Food BusinessHouse Wellness Foods CorporationInternational Food BusinessLocal currency basisRestaurant BusinessIchibanya Co., Ltd.Retort pouched curryFood service products********Functional drinks business in ThailandNet sales of all domestic restaurantsNet sales of existing domestic restaurantsNumber of customersAverage sales per customer-0.5+9.3-0.5-9.0-0.3-0.9-1.2-7.7+4.1-1.5Spice+24.6+15.9+12.4+2.7+14.1-8.2-2.5-7.5-3.7-5.6-24.3-13.4-11.0-11.1-14.9+12.7-2.0+3.9+7.0+5.0Ukon No Chikara-63.4-43.1-41.6-52.1-48.5+7.8-32.2+6.1+1.9-5.2C1000-35.2-24.4-30.2-16.3-27.7-25.8-26.2+3.0-11.7-17.5Bottled products-20.4-3.6-11.8+1.6+3.9-3.3+7.8-11.7-1.0Ichinichibun No VitaminBusiness in the United States-5.2+7.1+4.4+4.4-3.4-11.4-1.8+14.8+2.4+21.8+6.0+6.7+6.1+9.6+7.5+8.3-2.0Business in China+21.3+49.5+30.8+0.0+25.7+46.0-21.6+9.2+21.1+10.2-9.1-3.7+37.1+271.0+86.7-42.7+64.7+14.5-8.9-23.0+288.5+12.1-18.6-11.4-15.0-13.4-18.5-11.3-14.5-13.2-19.0-13.7-10.7-16.5-15.0-8.4-8.3+4.8+5.3+1.7+3.5-7.4-6.6-7.5-7.2-6.1-7.6+1.6+2.5+2.7-0.2+0.7+2.8+2.7+2.4+2.2+1.0+1.6+8.9+5.9-2.2-1.4-2.8+1.4* Results by product are based on shipments and are for reference only.Copyright (c) House Foods Group Inc. All rights reserved.24Spice/Seasoning/Processed Food BusinessSupplementary MaterialsFY2021 Factors in operating profit changeFactors for profit increase Factors for profit decreaseBillion yenNet salesOperating profitROSBreakdown of sales (main factors)House Foods Corp. (consolidated)*1Curry rouxStew rouxSpiceTotal of retort pouched products*2Food service productsResults117.412.610.8%Year on year-3.0-3.0-2.5%-19.1%-2.2pt(Billion yen)15.6* Results by product are based on shipments and are for reference only.106.936.512.321.418.615.6-3.4-1.3-0.5-1.3-0.4-3.1%-3.4%-3.9%-5.6%-2.2%+0.7+5.0%Change in sales-1.4Change in cost of sales ratio-1.2Marketing costs-0.5Other expenses+0.5Gaban and other affiliated companies, adjustment-0.512.6FY2021Gaban Co., Ltd.(non-consolidated)*1 Excludes House Foods Wellness products (Health Food Business) and exported products +4.0%+0.38.2FY2020(International Food Business)*2 Total of retort pouched curry, retort pouched hashed beef sauce and retort pouched stewThe absence of special demand arising from at-home consumption the previous fiscal year has had an impact mainly during the first nine monthsOperating profit fell, reflecting rising raw materials prices from the second half, in addition to increased depreciation andamortization expense due to investments for growth Household-use businesshome to reduce the burden of cooking.- As COVID-19 became part of everyday life, there was a growing tendency for people to eat out or buy food to eat at – Worked to strengthen ability to propose value, assuming changes in customer needsCurry roux: Promoted cooking with a frying pan and enhanced menu varietiesRetort pouched products: Expanded growing mid-range and high-end brands in addition to promoting shift to microwaveable retort pouched productsSpices: Strengthened proposals of fresh food alternatives and spices and seasonings to brighten up everyday life Food service-use business- Sales recovered from the dramatic slump of the previous year, though not reaching pre-pandemic levels- A production line for retort pouched large volume products went into operation to capture lunch demand (July 2021)Spice Curry No TakumiGrated Daikon Radish PasteCurry Ya Curry(Microwaveable retort pouched products)Copyright (c) House Foods Group Inc. All rights reserved.25Post-COVID Market TrendsSupplementary Materials Spice sales and sales of retort pouched curry products had been trending upward due to a rise in confirmed cases but gradually stabilized. A widening of the market was observed compared with the pre-pandemic structure Sales of curry roux products saw a 1.5 fold increase during the first wave but then returned to previous levelsSales amounts(Million yen)1st wave2nd wave3rd wave4th wave5th wave6th waveCOVID cases2,4002,2002,0001,8001,6001,4001,2001,0008006004002000600,000550,000500,000450,000400,000350,000300,000250,000200,000150,000100,00050,0000COVID cases陽性者数Curry rouxルウカレーRetort pouched curryレトルトカレーSpiceスパイスSource: – INTAGE, Inc. SRI+ Weekly Data Market for curry roux, retort pouched curry and spice productsPeriod: Week commencing January 6, 2020 to week commencing March 28, 2022- Prepared by House Foods Corporation based on “Open Data- Trend in the number of newly confirmed cases (daily)” (Ministry of Health, Labour and Welfare)Copyright (c) House Foods Group Inc. All rights reserved.26Curry Rice Eating Frequency Curry rice is still being eaten at home more frequently than it was before COVID. At the end of 2021, curry rice was eaten less frequently with the relaxation of measures to encourage people to exercise self-Supplementary Materialsrestraint and avoid going out. However, frequency increased again during the resurgence of COVID-19 from 2022. Curry rice is still being eaten frequently at lunchtime.(Household consumption index)朝食Breakfast昼食Lunch夕食Dinnerその他Other120100806040200/19102/29102/39102/49102/59102/69102/79102/89102/99102/019102/119102/219102/10202/20202/30202/40202/50202/60202/70202/80202/90202/010202/110202/210202/11202/21202/31202/41202/51202/61202/71202/81202/91202/011202/111202/211202/12202/22202/32202Source: Data output by House Foods Corporation using the ShokuMAPⓇ systemPeriod: January 2019 – March 2022(Household consumption index: Eating frequency per 1000 households per day)Target menu: Curry riceCopyright (c) House Foods Group Inc. All rights reserved.27Health Food BusinessSupplementary MaterialsFY2021ResultsYear on year Factors in operating profit changeFactors for profit increase Factors for profit decrease* Results by product are based on shipments and are for reference only.-0.4Change in cost of sales ratio+0.8Billion yenNet salesOperating profitROSBreakdown of sales (main factors)Functional spiceUkon No ChikaraVitaminC1000Ichinichibun No VitaminLactobacillus business14.4-0.1-1.0%6.34.09.14.24.30.5(Billion yen)FY2020Change in sales-1.0-0.8+0.3-0.2-0.2-0.6-0.9+0.4-0.1-5.6%(cid:695)+1.6pt-3.0%-5.2%-6.2%-17.5%+8.9%-17.2%FY2021-0.1Marketing costs+0.1Other expenses+0.4Segment IssuesMedium-Term Management Plan ThemesThemes of initiatives in the current fiscal yearOverreliance of Ukon No ChikaraImbalance in sales structureAllocation of resources to growing domainsCreation of Functional Ingredients Value ChainRealization of global growthImplementation of structural reformMaximization of effects of integration of sales functions in Japan* Withdrew from unprofitable business the previous fiscal yearOperating loss narrowed compared to the previous fiscal year, partly reflecting progress on the reduction of costs and reduction of fixed expenses Structural reform initiativesWithdrawal from unprofitable business- A decrease in sales of around 2.3 billion on a shipment basis was also a factor contributing to cost improvement.Integration of sales functions- Concentrated on Ichinichibun No Vitamin (jelly)Reaped certain rewards such as the diversification of sales channelsYear-on-year changePercentageAll channels+16.5%-Mass retailers/Drugstores+36.8%+5.2%Copyright (c) House Foods Group Inc. All rights reserved.28International Food BusinessSupplementary MaterialsROS13.4%Billion yenNet salesOperating profitBusiness in the United StatesTofu businessBusiness in ChinaBusinesses in ASEANThailandFY2021ResultsYear on yearYear on year in local currency+9.7%+9.8%+14.8%+14.5%-0.0pt+9.8%+5.9%+10.8%+6.9%+22.4%+10.2%+5.1+0.7+1.3+1.3+1.6+1.2+13.1%+12.1%39.15.214.813.68.510.810.5 Factors in operating profit change(Billion yen)Factors for profit increase Factors for profit decreaseBusiness in the United States-0.1Business in China-0.15.2Exports and others+0.04.6Businesses in ASEAN+0.8+1.4+14.2%+13.0%FY2020FY2021Growth momentum was maintained in all three priority areas despite outstanding issues such as action on rising raw materials prices Tofu business in the United States- Strengthened the production system for development of the Soybean VC (2023: new production lines at LA plant, 2025: third site)- The new production lines at the LA plant, which were an issue the previous fiscal year, reached the targeted level of stable operation.Extreme inflation and supply chain disruptions caused some issues in 4Q, and profit fell on a full-year basis Curry business in China- Achieved growth exceeding pre-pandemic levels despite the impact of sporadic COVID-19 outbreaksHousehold use products: Stepped up approaches in response to changes in purchasing channels in large urban areasIn second-tier and lower tier cities, progress on the development of new wholesalers helped lift salesFood service products: Made flexible approaches in response to changing marketFocused on the development of emerging curry specialty restaurants and the establishment of a raw materials supply schemeChina: Wei Du Du Curry(retort pouched curry product)Stepped up efforts to tap into growing need for convenience during the COVID-19 crisis Functional drinks business in Thailand- Sought to expand vitamin-taking opportunities such as the introduction of large-volume products- Achieved increases in sales and profits, partly due to penetration to TT channel (traditional market) and cost reductions (including Thailand: C-vitt Big Packa lighter tax burden)Copyright (c) House Foods Group Inc. All rights reserved.29Restaurant BusinessSupplementary MaterialsBillion yenNet salesOperating profitFY2021ResultsYear on year+0.7+2.2ROSBreakdown of sales (main factors)Ichibanya Co., Ltd. (Consolidated)Ichibanya Co., Ltd. (Non-consolidated)Overseas and others45.41.53.3%45.038.86.2+1.6%(cid:695)+4.8pt+1.5%-2.1%+31.2%+0.6-0.8+1.5 Factors in operating profit change(Billion yen)Factors for profit increase Factors for profit decreaseAmortization of goodwill, etc.+1.81.5Ichibanya Co., Ltd. (consolidated)+0.3FY2020FY2021 Changes in net sales and the number of stores of Ichibanya Co., Ltd. (Year on year)All restaurantsExisting restaurantsNumber of stores-0.7Net salesNet sales(All business categories)Number of customersJapanOverseas-2.2%-1.4%+15.6% +10.2%-2.8%(cid:695)1,259202(-26)(+15)Average sales per customer+1.4%(cid:695)Business environment remained challenging amid the protracted COVID-19 crisisProfit was boosted approx. 1.8 billion yen by the fact that, the previous fiscal year, impairment losses were recorded and goodwill was fully amortized.- Restaurants were requested to shorten business hours for prolonged periods and net sales from existing restaurants were down year on year- Continued to strengthen ability to meet increasing takeout and delivery demand.Number of stores handling home delivery: 977 (up 172 YoY), meal box sales: up 10.4% YoY- Introduced mobile order system in October 2021.Sought to promote as a convenience enhancing service suited to the COVID era Japan Overseas- Sales recovered from major slump the previous fiscal year, though situation varied from region to region.Overseas demand is firmly rooted and the number of restaurants continued growing during the COVID-19 crisisCopyright (c) House Foods Group Inc. All rights reserved.30Other Food Related Business/Adjustment Other Food Related Business Factors in operating profit changeSupplementary MaterialsFactors for profit increase Factors for profit decreaseDelica Chef Corporation+0.01.5Vox Trading Co., Ltd.-0.3Logistics and others-0.0(Billion yen)1.8FY2021ResultsYear on year45.61.53.2%19.424.5+1.6-0.3+1.4+0.3+3.8%-16.4%-0.8pt+7.6%+1.3%Billion yenNet salesOperating profitROS Breakdown of sales (main factors)Delica Chef CorporationVox Trading Co., Ltd.(Consolidated) Delica Chef Corporation Vox Trading Co., Ltd. (Consolidated)fruit) were lackluster due to COVID-19 Adjustment (elimination)FY2021ResultsYear on yearBillion yenNet salesOperating profit- The prepared food business drove growth throughout the year- Dessert sales had an impact from the absence of positive factors of previous fiscal year, while progress was made with a review of the profit structure for baked break- Despite efforts to improve the profitability of core products, sales of frozen food products (vegetables and FY2020FY2021-8.6-1.5-0.3+0.0(cid:695)(cid:695)- Strategic investments were made to develop the four value chains but certain costs were reduced in light of the protracted COVID-19 crisis Head office costsCopyright (c) House Foods Group Inc. All rights reserved.31Key Financial DataBased on current accounting standardsBased on new accounting standardsFY2015FY2016FY2017FY2018FY2019FY2020FY2020FY2021Supplementary MaterialsFY2022forecastSeventh Medium-term Management Planfinal targetNet salesOperating profitOrdinary profitProfit attributable to owners of parentEBITDACapital investmentDepreciationCash flows from operating activitiesCash flows from investing activitiesCash flows from financing activitiesTotal assetsNet assetsShareholders’ equityProfit per share (basic)Dividend per shareATOROSROAROEEBITDA marginEquity ratioBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenBillion yenYenYenTimes%%%%%241.910.812.222.618.76.86.912.5-8.3-3.7349.4260.3228.8220.48300.764.57.73.465.510.1283.812.314.08.725.27.79.321.3353.9266.6235.284.53320.814.38.93.566.53.7291.916.317.29.429.010.29.123.6296.717.619.113.830.211.39.320.9293.719.020.8283.819.419.811.532.316.39.924.2-6.4-7.60.806.511.05.167.74.68.731.111.310.023.2-8.6-6.2369.2287.3258.186.68460.776.810.95.369.93.4250.119.419.88.831.111.310.023.2-8.6-6.2396.3286.9257.886.87460.687.812.45.369.83.5253.419.221.114.030.112.410.916.1-10.4-10.1270.618.419.511.229.817.011.4(cid:695)(cid:695)(cid:695)382.0298.6269.0139.7546384.1299.6269.6113.60460.677.611.95.170.45.30.716.811.04.870.24.2-2.2-13.7-1.0-7.4-5.3-17.3378.9283.7251.891.0238371.0279.1247.3134.3244367.2280.9248.8113.73460.805.69.94.466.53.80.795.910.24.766.65.5305.026.0(cid:695)(cid:695)40.4(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)(cid:695)0.808.513.26.870.66.1Copyright (c) House Foods Group Inc. All rights reserved.32House Foods Group’s Philosophies and Medium-Term Business PlansSupplementary MaterialsFounding PhilosophyGroup PhilosophyHouse Ideals (Spirit)[Group CSR]Through our core business, we will fulfill three responsibilities to make an ongoing contribution to creating a wholesome society and to people’s health and well-being.（For Customers, For Employees and Their Families, For Society）[A vision of the Group]Striving to become a high quality company that provides “Healthy Life Through Foods” Striving for Four Value Chainsgoals◇ Founding PhilosophyIn every happy home throughout Japan you will find the warm flavor of home cooking, House. ◇ Group PhilosophyThrough food, we aim to be a good corporate citizen, connecting and collaborating with people to create smiles in their lives. ◇ House Ideals (Spirit) The Company’s mottoSincerity, Originality and EnthusiasmThe 10 House Values- Know yourself- Be humble in your self-confidence and pride- Creative work brings dignity- The advancement of House depends on the personal development of each individual- House’s strength is the strength of all of us combined- A salary is compensation for doing useful things for society- Being useful to society as employees and as a company- A useful employee is a strong partner for achieving business – Profits are necessary for a company to be useful to society- The dedicated passion each one of us feels for the company is the secret to success for HouseMedium-Term Business PlanCopyright (c) House Foods Group Inc. All rights reserved.33Seventh Medium-term Business PlanGeneral FrameworkSupplementary MaterialsHouse Foods Group’s GoalStriving to be a high quality company that provides “Healthy Life Through Foods” Striving for Four Value Chains- Aiming for growth alongside qualitative transformation -Priority Themes under the Seventh and Eighth Medium-term Business PlansFor customersGlobal Provision of “Healthy Life Through Foods”Achievement of growth driven by four value chainsRealization of three GOTCreation of new value through collaborative creationFor our employees and their familiesAchievement of diversityFor societyHealthy people and a healthy planetImplementation of job satisfaction transformationEstablishment of a recycling-oriented modelSupport for demonstrating individuality and achieving a mix of personalitiesAchievement of a society of healthy longevityStrengthening of corporate governanceSeventh Medium-term Business PlanCopyright (c) House Foods Group Inc. All rights reserved.34Seventh Medium-term Business PlanPolicy of Four Value ChainsFocus the allocation of resources on the Four Value Chains with the aim of becoming a high quality companyBuild on the Group’s unique strengths to provide “Healthy Life Through Foods” all around the worldSupplementary MaterialsValue we provide“Healthy Life Through Foods”Spice VCSoybean VCAim to create synergies through collaborative creation among group companies that handle spices and curryFunctional Ingredients VCUtilize lactobacillus, vitamins and spices more widely as a Group ingredientConsider utilizing soybeans not only in the tofu business in the United States but also in other business outside the United StatesValue-added Vegetables VC Take on challenge of creating a new value chain in the agriculture domain~Previous Medium-term Business PlansFuturePortfolio is unbalanced- Spice/Seasoning/Processed Food Business: Cash Cow (growth potential issue)- International Food Business: Each business in the three priority areas has grown into perspectiveRealization of growth story for each value chain- Facilitate utilization of resources by reconnecting related businesses from a VC – Also pursue possibility of creating value through synergy to increase the Group’s – Health Food Business: The segment is in the doghouse after the emergence of overall robustness- Restaurant Business: Profitability has declined due to the effects of COVID-19Question MarksStarsHighQuestion Marksa starmanagement issuesStarsHighInternational Food BusinesstGrowhpoen ttialRestaurant BusinessSpice / Seasoning / Processed Food BusinessHealth Food BusinessSoybean VCFunctional Ingredients VCValue-added Vegetables VCtGrowhpoen ttialSpice VCLowCash CowsDogsLowLowCash CowsHighProfit marginHighProfit marginCopyright (c) House Foods Group Inc. All rights reserved.DogsLow35Seventh Medium-term Business Plan“Three Responsibilities” KPIsSupplementary MaterialsThree ResponsibilitiesThemesKPI- Achievement of growth Net salesdriven by four VCsROS8.5%Seventh Medium-termBusiness PlanEighth Medium-termBusiness Plan305.0 billion yen360.0 billion yen9.4%14.4%For customers- Realization of three GOT- Creation of new value through collaborative creationEBITDA margin13.2%For our employees and their families- Implementation of job satisfaction transformation(Ease of work)Creation of time(Management of total actual working hours)- Support for demonstration of individuality and achieving a mix of personalities-Percentage of female employees in management posts-Mid-career recruitmentReduction of CO2 emissions1,850 hours1,800 hoursAt least 12%New graduate/Mid-career = 6:4At least 20%New graduate/Mid-career = 6:4- Establishment of a recycling-oriented modelScope 1, 2Scope 3-9%-17,000 tReduction of total emissions including waste-6%-18%(cid:695)-12%* Intensity compared with FY2013* Compared with before initiatives* Domestic production basesIntensity compared with FY2019For society- Achievement of a society of healthy longevitySetting of targets linked to each value chainExample targets- Promotion of good physical and mental health through everyday mealsQuicker and simpler meal preparation (complete shift toward microwaveable retort pouched products)Launch of products that are low in calories, sugar and salt- Market penetration of tofu as PBF and enhancement of value of tofu productsIncrease percentage of households that purchase tofu in the United States to 10% (2023)36Seventh Medium-term Business Plan Consolidated TargetsSupplementary MaterialsConsolidated targetsNet sales305.0 billion yenOperating profit26.0 billion yenManagement indicatorsTargets under Seventh Medium-termBusiness PlanATOROS(EBITDA margin)ROAE-ratioROE0.80 times8.5%13.2%6.8%70.6%6.1%Ideal propositionAt least 1.0 timesAt least 10%(cid:695)At least 10%(cid:695)Securing 10%- Aggressive investments under Seventh and Eighth Medium-term Business Plans to realize business growth- Management based on EBITDA margin up to the Eighth Medium-term Business Plan to realize steady investmentROS adjusted for impact of goodwill*8.5%(7.8%)Net salesROSEBITDA margin250.1 12.4%GAP3.9ptAmortization11.7 billion yen14.4%GAP5.0ptAmortization17.9 billion yen9.4%13.2%GAP4.7ptAmortization14.4 billion yen8.5%305.0 360.0・・・Doubling of business sizeEnd of Sixth PlanFY2020End of Seventh PlanFY2023End of Eighth PlanFY2026FutureFY20xx* Excludes goodwill amortization of 1.8 billion yen which arose when Ichibanya Co., Ltd. was made into a subsidiary; figure in parentheses is before the exclusion Copyright (c) House Foods Group Inc. All rights reserved.37Seventh Medium-term Business Plan Financial StrategiesPrioritize investment to realize growth and strengthen earning capacity through the 4 VCs and strengthen shareholder returns by shrinking assets such as cross-shareholdings Supplementary MaterialsAllocation of cash generated from expansion of earning capacity to growth domains as priority→Generation of new cash flows Cash flows from operating activities under Seventh Medium-term Business Plan70.0 billion yen(excludes Ichibanya)– Growth domainsProduction optimization GOTInternational Food BusinessM&A・New businesses- Existing domains- DX / Environment– Dividends*40.0 billion yen(Just over 20.0 billion yen invested under Sixth Plan)20.0 billion yen10.0 billion yen15.0 billion yen12.0 billion yenAllocation of cash generated from shrinking of B/S to shareholder returns10.0 billion yen– Purchase of treasury sharesAsset light B/S20% reduction in cross-shareholdings* Profit distribution policyContinue to pay stable dividends aiming for a consolidated payout ratio of at least 30%, excluding the impact of extraordinary income (losses) or goodwill amortization arising from business combinationsCopyright (c) House Foods Group Inc. All rights reserved.38Major Products and Services by SegmentSupplementary MaterialsSpice / Seasoning / Processed Food BusinessCurry rouxStew rouxRetort pouched currySpiceOther productsHouse Foods Corp.Gaban Co., Ltd. Malony Co., Ltd.Health Food BusinessHouse Wellness Foods CorporationFunctional spiceVitaminLactobacillusInternational Food BusinessRestaurant BusinessUnited SatesChinaASEANIchibanya Co., Ltd.Copyright (c) House Foods Group Inc. All rights reserved.39Major New Products and Varieties for Spring and Summer 2022 House Foods Corporation, House Wellness Foods CorporationCategoryProductCategoryProductSuggested retail price(reference price)On-shelf dateNew ProductsSpiceGaban Canned Curry Powder¥350Curry roux The Curry (Mild, Medium, Hot)Supplementary MaterialsRenewalHashed beef sauce rouxRetort pouched curryRipe Tomato Hayashi Rice Sauce (10 servings)(5 servings)Azabu Juban Beef Curry Special Demi-Glace Sauce–Made with fresh creamFunctional drinkPERFECT VITAMINIchinichi-bun No Vitamin Grapefruit FlavorFunctional drinkPERFECT VITAMINIchinichi-bun No Vitamin Dietary Fiber(New Products)Suggested retail price(reference price)On-shelf date(¥334)¥297¥156¥418¥181¥189Feb. 14Feb. 14Feb. 14Mar. 14Mar. 14Vinegar and Fruit Juice Paste VinekaSpiceSpiceSpiceC.A.M.T.A. Black PepperGaban Organic Spice Series(23 items in total)PasteRakuen no SatetomPomegranateMuscatPink GrapefruitPowderCoarsely GroundRakushiteFunctional drinkJelly beverageVarietyMaru de Smoothie Berry Mix & Peach FlavorPineapple & Fruits Mix FlavorCurry roux Spice Curry No Takumi Chicken CurryStewP Borscht-style side dish soup baseSundubu-style side dish soup baseErabareshi Ninkiten Rich Beef CurryJAPAN MENU AWARDPakistan-style Chicken CurryKarasa Kiwadatsu Keema CurrySpiceful Chicken CurryMenu seasoningZack Zack FishMayo Pepper Flavor Baked SalmonMaze Tofu Chilli Powder Tacos FlavorMenu seasoningRetort pouched productsRetort pouched productsMenu seasoningFeb. 14Feb. 14Feb. 14Feb. 14Feb. 14Mar. 14Mar. 14Feb. 14Feb. 14Feb. 14Feb. 14Feb. 14Feb. 14(¥125)¥200¥420-¥700(¥358)(¥169)¥190¥356(¥280)(¥314)(¥314)(¥160)(¥120)(Variety)(Renewal)* There are other new products, varieties and renewed products.Copyright (c) House Foods Group Inc. All rights reserved.40The forward-looking statements such as plans, strategies and result forecasts included in this document are based on the information available to the Company at the time of the announcement and on certain assumptions considered reasonable, and the Company makes no representations as to their achievability. Actual results may differ materially from the forecast depending on a range of factors. Amounts of less than one million yen are rounded to the nearest million yen.